Let's break down the problem step by step: ### 1. **Calculate Total Capital Before Admission** - Emily: \$25,000 - Ashley: \$10,000 **Total capital before Jenny enters:** \$25,000 + \$10,000 = **\$35,000** --- ### 2. **Jenny's Admission** Jenny pays **\$15,000** for a **1/4 (25%) interest** in the partnership. --- ### 3. **Implied Total Capital After Admission** If Jenny's \$15,000 is for a **1/4 interest**, the **total capital implied** is: \[ \text{Implied Total Capital} = \frac{\$15,000}{1/4} = \$60,000 \] --- ### 4. **Total Capital After Admission** If the partnership chooses to **revalue (bonus method)**, the new total capital will be \$35,000 (old) + \$15,000 (Jenny's investment) = **\$50,000**. But since Jenny is getting a 1/4 interest for \$15,000, and the implied total capital is \$60,000, there is a **bonus to the old partners** of: \[ \$60,000 - \$50,000 = \$10,000 \] This \$10,000 bonus will be allocated to Emily and Ashley in their profit-sharing ratio (6:4). --- ### 5. **Allocate the Bonus** - Emily: \( \$10,000 \times \frac{6}{10} = \$6,000 \) - Ashley: \( \$10,000 \times \frac{4}{10} = \$4,000 \) **New capital balances:** - Emily: \$25,000 + \$6,000 = \$31,000 - Ashley: \$10,000 + \$4,000 = \$14,000 - Jenny: \$15,000 **Total: \$31,000 + \$14,000 + \$15,000 = \$60,000** --- ### 6. **Check Jenny's Capital** Jenny's capital balance will be her investment, **\$15,000**. --- ## **Final Answer** **Jenny's capital balance will be:** \[ \boxed{\$15,000} \] **Correct answer: A) \$15,000**